Karen Kessler, Atlantic Health's board chair, and Ronald Swinfard, president and CEO of Lehigh Valley Health Network, helped form AllSpire Health Partners, a consortium of more than 30 hospitals in New Jersey, Pennsylvania and the Hudson River Valley of New York. AllSpire will share expertise and money and pursue research projects to compete in the era of Obamacare.Robert Sciarrino/The Star-Ledger

Driven by the demands of the Affordable Care Act, about 30 hospitals in New Jersey, Pennsylvania and New York's Hudson River Valley have banded together to form what its founders describe as the largest alliance of health systems in the country, The Star-Ledger has learned.

AllSpire Health Partners, comprised of seven hospital systems worth a combined $10.5 billion — including Atlantic Health, Hackensack University Health Network and Meridian Health in New Jersey — will formally announce the agreement Thursday. Many of the 400,000 employees and their families began learning about the deal in company-wide e-mails sent late tonight, said Karen J. Kessler, who chairs the board of trustees at Atlantic Health System and for the new company.

The partnership will pool the expertise and spending power of its members — many of which are ranked nationally for different treatment specialties — to give the alliance greater clout to attract more patients and research opportunities, Kessler said in an interview with The Star-Ledger.

"This is the future of health care," Kessler said. "This partnership will allow seven cutting-edge health systems to work in tandem."

The alliance is not a merger, said Ronald Swinfard, president and CEO of Lehigh Valley Health Network and an AllSpire board officer. The 5 million patients served in the seven hospital networks will not have to switch hospitals or insurance plans. Hospitals names will not change, and there is no plan to eliminate jobs or consolidate human resources or information technology or other responsibilities.

AllSpire's announcement comes during an era of rapid hospital mergers and takeovers, triggered by the lingering effects of the recession and the requirements of Obamacare. Beginning next year, hospitals can expect an onslaught of new patients who would be covered by the new health care law, but with less generous Medicare reimbursement rates and shorter hospital stays because Obamacare stresses preventative care.

"When you are all facing the same challenges — the same shift in the paradigm of health care — it began to be very clear one of the best ways to get there, is together," Swinfard said.

Executives from each hospital system have been meeting for months to produce a list of priorities, to be given to AllSpire's board when it meets for the first time in October, said Swinfard, a physician. Each of the seven hospital systems contributed $1 million to fund the alliances' initial activities, Kessler said.

Each hospital system has distinguished itself in at least one area of medicine, such as cardiac care at Morristown Medical Center, cancer at Hackensack and diabetes at Lancaster General Health, AllSpire's founders said.

The alliance allows hospitals to share their expertise and replicate it at all hospitals so patients don't have to travel to get the best treatment, said Kessler, who predicted it "will give patients greater access to (the) best health care services."

For employees, it may mean more education and training. "We are going to be learning from the best and keep improving," Kessler said.

New Jersey's hospital industry has seen several mergers in recent years as hospitals across the state look for partners or buyers. Kessler predicted the announcement "will expedite that process for a lot of people."

Hospital industry experts did not have details on AllSpire's announcement, but in general viewed alliances favorably.

"Alliances of this sort could be productive in joint research projects or as a forum for sharing information on innovative approaches," said Princeton University Economics Professor Uwe Reinhardt, a national expert on health care.

"The thing to guard against is common fronts in negotiating with insurers over prices, or even tacit agreements not to compete on prices," Reinhardt said.

Lisa Goldstein, a national health care analyst for Moody's Investor Service noted that one of the most successful alliances pooled the internationally renowned clout and expertise of Boston's leading teaching hospitals and universities, such as Massachusetts General Hospital and Harvard Medical School to form the Center for Integrative Medicine and Innovative Technology. The hospitals and schools are run separately but with a senior management team determining the strategy, she said.

Moody's favors consolidations and alliances because they strengthen individual hospitals against the weight of debt and pension obligations, as well as the pressure from Obamacare's regulations and the "deep and profound recession we are still coming out of," Goldstein said.

"Almost every day around the country there is a lot of chatter, everybody is talking to everybody about partnerships," Goldstein said. "There is a safety in numbers."

NEW HOSPITAL ALLIANCE
About 30 hospitals are forming an alliance called AllSpire Health Partners. The member hospitals and health systems: